Time To Worry? Analysts Are Downgrading Their Sequans Communications S.A. (NYSE:SQNS) Outlook

Today is shaping up negative for Sequans Communications S.A. (NYSE:SQNS) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

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Following the downgrade, the latest consensus from Sequans Communications' four analysts is for revenues of US$41m in 2026, which would reflect a sizeable 31% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 15% per share from last year to US$1.40. Yet before this consensus update, the analysts had been forecasting revenues of US$47m and losses of US$1.13 per share in 2026. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for Sequans Communications

The consensus price target fell 38% to US$12.50, implicitly signalling that lower earnings per share are a leading indicator for Sequans Communications' valuation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Sequans Communications is forecast to grow faster in the future than it has in the past, with revenues expected to display 31% annualised growth until the end of 2026. If achieved, this would be a much better result than the 11% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 20% per year. So it looks like Sequans Communications is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Sequans Communications.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Sequans Communications' financials, such as major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 2 other flags we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.